Graham (GHM) Reports In-Line Q3 EPS, Revenues Beat; Offers FY21 Revenue Mid-Point Guidance Above Consensus

Graham (NYSE: GHM) reported Q3 EPS of $0.11, in-line with the analyst estimate of $0.11. Revenue for the quarter came in at $27.2 million versus the consensus estimate of $25.26 million.

• Third quarter sales of $27 million yielded $0.11 earnings per share
• Orders were $61.8 million in the quarter including $52.3 million from the defense industry
• Record backlog of $149.7 million; 45% to 50% expected to ship in next twelve months
• Fiscal year 2021 revenue expected to be $93 million to $97 million with gross margin between 21% and 22%

James R. Lines, Graham’s President and Chief Executive Officer, commented, “We delivered a solid quarter as strong refining sales in Asia offset our weaker domestic refining and petrochemical markets, resulting in 7% year-over-year growth. In fact, despite difficult current macroeconomic conditions, our team delivered both top and bottom-line growth.

A significant takeaway in the quarter was our record level of orders and backlog. As we have discussed over the last several years, we have focused significant resources on building our defense business because we believe requirements in that market provide operational synergies and align with our capabilities which include:

• vacuum and heat transfer how-how
• complex, long-cycle project management, and
• precision fabrication of large weldments.

Importantly, we believe defense markets offer long-term growth potential, provide improved visibility that reduces investment and planning risk, and are less cyclical than our historic core markets. Notably, more than 80% of the $62 million in new orders in the quarter and approximately 70% of the record $150 million in backlog are from the U.S. Navy. We intend to consistently intensify our focus on sales to the stronger and more stable defense market while staying committed to our core markets. We are also actively participating in the energy transition into renewable fuels and other areas of growth in alternative energy markets.”

GUIDANCE:

Graham sees FY2021 revenue of $93-97 million, versus the consensus of $94.94 million.

For earnings history and earnings-related data on Graham (GHM) click here.

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